Topix Snaps Two-Day Loss as U.S. Sentiment Counters GDP

Japan’s Topix index rose, snapping a two-day loss, as positive consumer sentiment in the U.S. countered data that showed Japan’s economy expanded less than expected in the fourth quarter.

Paper makers and utilities led gains as all but four of the 33 Topix (TPX) industry groups advanced. Rakuten Inc. plunged 9.5 percent after the online retailer announced a $900 million purchase of the Viber Internet messaging and calling service. Honda Motor Co., a carmaker that gets about half its revenue in North America, added 0.9 percent after falling as much as 0.7 percent.

The Topix gained 0.7 percent to 1,192.05 at the close in Tokyo after falling as much as 1 percent. The Nikkei 225 Stock Average increased 0.6 percent to 14,393.11. The yen advanced 0.2 percent to 101.59 per dollar, strengthening a fourth day for the longest stretch of gains since September. U.S. stocks rose Feb. 14 after a gauge of consumer sentiment beat estimates.

“External factors aren’t bad for Japanese stocks, and the market can rise a lot if good domestic catalysts come along,” said Yusuke Kuwayama, portfolio manager at Tokio Marine & Nichido Fire Insurance Co. “The U.S. macro economy continues to recover despite the bad weather.”

Japan’s gross domestic product rose an annualized 1.0 percent in the fourth quarter, the Cabinet Office said today in Tokyo. Economists surveyed by Bloomberg had expected a 2.8 percent advance. The pace was slower than any forecast in the poll, underscoring risks to the recovery as a sales-tax increase looms in April.

U.S. Confidence

Data showed consumer confidence in the U.S. was stronger than projected in February. The Thomson Reuters/University of Michigan preliminary index of U.S. consumer sentiment held at 81.2 this month. The median estimate in a Bloomberg survey of 74 economists called for a decline to 80.2.

The Topix tumbled 8.5 percent this year, the most among major developed markets, as signs of a slowdown in China and a rout in developing-market currencies stoked concern about the global economy while the Federal Reserve cuts stimulus. The measure closed near its 200-day moving average, which was at 1,192.35.

The index jumped 51 percent in 2013 as the BOJ’s unprecedented monetary easing weakened the yen and Prime Minister Shinzo Abe pressed ahead with his growth strategy dubbed Abenomics. The central bank is set to keep policy on hold at the meeting ending tomorrow, according to a Bloomberg News survey of 34 economists. Thirty-five percent of respondents in a separate poll expect the BOJ to expand stimulus in the July-Sept. quarter, while 12 percent estimate it will happen in the January through March quarter.

BOJ Watching

“The actual GDP figures aren’t good even though people thought Abenomics was on the right track,” said Hideyuki Ishiguro, a senior strategist at Okasan Securities Co. in Tokyo. “The tax bump in April could weigh on expectations for beating deflation. But the BOJ is watching. Falling stocks are calling for it to act.”

The Topix Pulp & Paper index gained 2.7 percent, with Daio Paper Corp. rising 5.5 percent to 975 yen and Oji Holdings Corp. advancing 3 percent to 478 yen. The Topix Electric Power & Gas index added 2.6 percent. Kansai Electric Power Co. climbed 5.6 percent to 1,115 yen, while Hokkaido Electric Power Co. gained 3.8 percent to 1,026 yen.

Futures on the Standard & Poor’s 500 Index lost less than 0.1 percent today. The equity measure added 0.5 percent on Feb. 14, capping its best weekly gain since December, amid better-than-forecast earnings and continued confidence in the strength of the world’s largest economy.

Exporters to the U.S. were mixed with Honda adding 0.9 percent to 3,747 yen. Toyota Motor Corp., a carmaker that counts North America as its biggest overseas market, fell 0.3 percent to 5,793 after rising as much as 0.7 percent.

Rakuten Slumps

Rakuten slumped 9.5 percent to 1,499 yen, the biggest loss since Oct. 8. After buying Viber, Rakuten will be competing with Naver Corp.’s Line service and Tencent Holdings Ltd.’s WeChat, which both combine instant messaging with shopping and gaming, as well as Microsoft Corp.’s Skype service. Rakuten posted annual earnings on Feb. 14 that were 21 percent below analyst projections, the second straight year it missed estimates.

Of the 288 companies on the Topix that reported quarterly earnings from the beginning of January and for which estimates were available, 65 percent beat analysts’ profit estimates as of Feb. 14, according to data compiled by Bloomberg.

The Topix traded at 1.17 times book value today, compared with 2.60 for the S&P 500 and 1.86 for the Stoxx Europe 600 Index on Feb. 14.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

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